Distribution & Follow-Through DaysInvestor Business Daily model follows the model of distribution and follow-through days based on volume as follows:
Distribution days:
A distribution day is defined as a day in which the move by the index is moves -0.5% on stronger volume than the previous day.
Follow-Through days:
On Day 4 or later of the attempted rally, at least one of the key market indexes must deliver a strong gain in volume up from the previous day. That big gain in rising volume is the follow-through day, which confirms that a new uptrend is underway.
A follow-through day can't pick the exact day that a market bottoms, but it can get you in close to the bottom.
Because this model is intended to value the market health, and how market-makers are positioning themselves, this cluster historically signifies a more defensive market.
